Given the burst of the Housing bubble and subsequent credit crunch, is it any wonder the appetite for creative financing investment tax credits has dried up with financial institutions facing increased regulatory oversight after the unexpected consequences of the Lehman collapse? Traditional American investment banking is dead; long live the bank holding company.

At Solar Power International 2008, industry associations SEPA (Solar Electric Power Association) and the SEIA were cheerleaders and maintained forced industry optimism regarding the Solar ITC versus rare straight talk from renewable energy financial leaders like MMA Renewable Ventures CEO Matt Cheney. But now in a joint news teleconference with the leaders of the nation’s renewable energy trade associations, SEIA President Rhone Resch said:

However, the current downturn in the economy has substantially reduced the utility of the tax credits to individuals, businesses, and project developers. So we are asking Congress to make some refinements to the Tax Policy to insure that these credits get fully utilized and continue the growth in all sectors of the renewable energy industry. And specifically, these credits should be improved to be refundable, they should improve transferability, and they should allow Master Limited Partnerships to fully utilize the credits.

So that is priority number one, that is a near term stimulus, that is a change the White House and Congress can make very, very quickly. And we are asking them to do that as soon as possible.

Later in a response to a question from George Lobsenz with The Energy Daily about the ITC refinements, Mr. Resch said:

The investment tax credits, that are available for solar, are a very effective tool when you have a tax credit appetite. When that tax credit appetite starts to decrease, which is what we have seen over literally the last 60 days or so, it becomes less useful. And so the modifications that we are specifically looking for as I mentioned before are:

Refundability, and what that means simply is that instead of taking a credit you are receiving a payment from the federal government so basically the same type of economic transaction if you will.

Transferability, so that you have greater flexibility as to who actually can use that tax credit and one example is the use of master limited partnerships which would allow additional outside investors to be able to invest in solar energy projects, utilize the tax credit, and provide the financing to get these projects moving forward.

Near term, and by that I mean the next two years, the utilities may be the only US solar customer with the tax appetite to take advantage of the Solar ITC for large scale projects. SunPower Corporation (NASDAQ:SPWRA) summarizes this conclusion in the slide, “Utilities Add Substantial Tax Capacity” from their recent 2008 Analyst Day Presentation although they also recognize the Utilities have high financing requirements for medium to long term duration credit.

“Who Will Be the Next Energy Czar?” asks Ucilia Wang at Greentech Media. I’ve heard speculation that President-elect Barack Obama’s choice for the Secretary of Energy position may hail from the battle ground state of Pennsylvania. Former Pennsylvania Department of Environmental Protection Secretary Kathleen A. McGinty is supposed to be under consideration for the Secretary or Deputy Secretary of Energy post. Meanwhile Pennsylvania Governor Rendell may be angling for the Secretary of Energy slot himself, perhaps to forward his Alternative Energy, clean coal agenda?